MICO 606: Post-Merger Integration Process for the Energy Industry Spring 2016

Transcription

1 MICO 606: Post-Merger Integration Process for the Energy Industry Spring 2016 COURSE SYLLABUS Professor: Gustavo Grullon Phone: Office: 326 JGS Hall Course Description: Many M&A transactions result in failure mainly because the merging firms are unable to integrate their operations and functions after the deal is closed. In this course you will learn how to manage the post-merger integration process in an efficient and effective way. This course will do a deep dive on how companies manage the integration process and will have takeaways applicable to the energy industry. Presentations by guest speakers will complement the lectures and class discussions. This course covers topics such as: The key activities that make-up the integration process The main challenges companies face during the integration process How to measure post-merger performance Managing integration in cross-border mergers and acquisitions The drivers of M&A transactions in the oil and gas industry The process of integrating firms in the oil and gas industry Post-merger corporate policies 1

2 Course Packet: The course packet contains all the cases and articles that will be assigned during the course. Lecture notes and assignments will be distributed in class. Quizzes: I will give several pop quizzes to monitor class progress. Class Participation Class participation is a fundamental part of this course. Therefore, you should read the assigned chapters and articles before coming to the lectures. Remember that your questions and comments can significantly enhance the quality of the class. Note: You should be prepared to answer unexpected questions ( cold calls ). Attendance: As this is a two day course, it is essential for students to attend class for the full duration on both days. Failure to attend some or all of the course sessions would constitute grounds for a grade deduction commensurate with the amount of material missed. Mini-presentations: During class, teams will work on several projects related to the post-merger integration process. Each team will present their analyses and findings to the class. Project: At the end of the course students are expected to prepare a report (10 to 14 pages) of a recent M&A transaction. Before you begin this project, you need to form a team of five or six people and choose a large M&A transaction in the oil and gas industry that was completed before You should develop a report that includes the following information: 1.Detailed chronology of the events related to the M&A transaction. 2.The potential reasons for the transaction and the potential sources of synergies. 3.A rigorous statistical analysis of the post-merger operating and stock performance. 4.Perform a careful analysis of the post-merger integration process to explain why the M&A transaction appears to be creating or destroying value. 5.Your final recommendations. 2

3 The due date for the project is March 19. Each group will present their findings to the class on March 12 (20-25 minute presentations). Grading: Mini-Presentations: 20% Final Presentation and Project: 60% Quizzes: 10% Participation: 10% Disability Based Accommodations: Any student with a documented disability needing academic accommodations is requested to speak with me during the first two weeks of class. All discussions will remain confidential. Students with disabilities should also contact Disabled Student Services in the Ley Student Center. Honor Code You should follow the letter and the spirit of Rice s Honor Code in all of your actions throughout the course and at all times. You must sign the honor pledge on all cases, quizzes, and exams. I counsel you that it is a violation of Rice s Honor Code to use or possess any course material from past years, or to seek help ( unauthorized assistance ) from a student who has previously taken this course. Any student who assisted you would also be in violation. You are permitted to use the course textbook, class notes, and your own notes during the final exam. Laptops The use of laptops for activities unrelated to the course is not allowed during class. 3

4 Post-Merger Integration Process for the Energy Industry MICO 606 Prof. Gustavo Grullon Course Outline Day 1 (Feb. 27) Topics Introduction to Post-Merger Integration The Link between the Due Diligence Process and the Integration Process Team Project Mini-presentations Measuring Post-Merger Performance Operating Performance Stock Performance Measuring Post-Merger Performance-Application Team Project Mini-presentations Managing Integration in Cross-Border Mergers and Acquisitions Textbook Reading and Articles Chapters 6 (Postclosing Integration) and 12 (Cross- Border Mergers and Acquisitions) from the M&A textbook: Mergers, Acquisitions, and Other Restructuring Activities. Donald M. DePamphilis, Academic Press, Seventh Edition. Making the Deal Real: How GE Capital Integrates Acquisitions by Ronald N. Ashkenas, Lawrence J.DeMonaco, and Suzanne C. Framcis. Evaluating M&A Deals: Accretion vs. Dilution of Earnings-per-share by Carliss Y. Baldwin. A Big (Double) Deal: Anadarko s Acquisition of Kerr- McGee and Western Gas Resources by Clayton M. Christensen and Curtis B. Rising. 4

5 Day 2 (Mar. 12) Topics M&A Activity in the Oil and Gas Industry Integration Challenges in the Oil and Gas Industry Guest Speaker-Abraham R. Varghese Post-Merger Corporate Policies Investment Policy Financial Policy Corporate Finance vs. Project Finance Financing Projects in the Oil and Gas Industry Guest Speaker-David Pruner Final Presentations Textbook Reading and Articles BP and the Consolidation of the Oil Industry, by Forest Reinhardt, Ramon Casadesus-Masanell, and David J. Hanson. BP Amoco (A): Policy Statement on the Use of Project Finance by Benjamin C. Esty and Michael Kane. BP Amoco (B): Financing Development of the Caspian Oil Fields by Benjamin C. Esty and Michael Kane. 5

6 Guest Speakers Abraham R. Varghese Abe Varghese is a professional accountant with about 8 years of experience with a strong focus on oil field services, oil & gas midstream, oil & gas exploration and production, and power generation. His specialties include external auditing, technical accounting, operations accounting and capital projects controllership. He spent most of his career in public accounting with Ernst & Young LLP and Deloitte & Touche LLP. He also worked in operations accounting and capital projects with Ensco Plc. Currently, he is a staff member with the Division of Registration and Inspections of the Public Company Accounting Oversight Board (PCAOB). He has undergraduate degrees in Accounting and Finance from the University of Central Oklahoma and he is a licensed Certified Public Accountant (CPA) with the State of Texas. He is married with three children and likes to spend his free time reading, involved in church, with family, and jogging. 6

7 David Pruner David Pruner is a partner in Heidrick & Struggles Houston office and a member of the Industrial Practice, specializing in the energy sector. David brings more than 15 years of significant energy experience, and is focused on the growing segment of private equity-backed energy firms. He spent the past 12 years at a leading global consulting and research firm for the energy, metals and mining industries, where he served as senior vice president of financial sales and account management. Prior to that, he served as an executive at JM Huber and several other energy firms. Earlier in his career, David worked in financial services as treasurer and director of marketing and sales at Bridgewater Associates, and in the energy division of Manufacturers Hanover Trust. In addition, he served in the United States Marine Corp. David received a bachelor's degree from Southern Methodist University and an MBA from the A.B. Freeman School of Business, Tulane University. 7